BP Oil-Spill Battle Update July 2010

As the BP Oil-Spill story unfolds, Leaders we Deserve analyses and updates the leadership stories emerging in the last weeks of July. The notes are provided for students of business and leadership.

Friday July July 30 Up-date discontinued as month and the well-capping story draw to an end. First accounts emerging of blatant exaggeration of the environmental consequences of spill.

Tuesday July 27th. Tony Hayward goes. Weather conditions improving. BP says it has been given permission to prepare for a “static kill” – pumping mud into the top of the well through the new cap – a step viewed as an intermediate measure. The firm would then need final approval from the US to carry it out.

Earlier Posts:

Monday 19th July

Overnight came news from Reuters. The U.S. government released a letter to BP Chief Managing Director Bob Dudley from retired Coast Guard Admiral Thad Allen that referred to an unspecified type of seepage near the mile-deep (1.6 km-deep) well along with “undetermined anomalies at the well head…I direct you to provide me a written procedure for opening the choke valve as quickly as possible without damaging the well should hydrocarbon seepage near the well head be confirmed,” Allen wrote. His concern was backed up with chilling evidence from the sea-bed.

Latest developments

Publically-available information reveals more enthusiasm for opening the restraining choke-valve by the Admiral than by the BP leadership. We have here a typical situation in which leaders have to take decisions in the absence of all the information they would like to have.

BP and the US Government would both like to minimise the damage to the environment. Where they differ is concerns for damage to BP’s future , the importance of being seen to be doing the right things for important stakeholders, avoiding possible criticisms of ‘doing the wrong things, not acting decisively enough and so on.

BP prefer to leave the well capped. US Govenment sources may agree to some degree but also feel the need to avoid risks of being accused of tardiness, and of weak leadership.

Doug Suttles, BP’s chief operating officer, said the company now hopes to keep the damaged well shut until the relief well is completed in August and the leak is sealed off with heavy drilling mud and cement. “We’re hopeful that if the encouraging signs continue that we’ll be able to continue the integrity test all the way to the point that we get the well killed,” he told reporters before Allen issued his statement. “Clearly we don’t want to reanimate flow into the Gulf if we don’t have to.” Suttles’ statement could indicate diverging viewpoints between BP and the U.S. government on plans for the well integrity test. It prompted Allen who will ultimately make the final call on the test to issue a statement that “nothing had changed” in the joint plan going forward.

There is apparent willingness from the US side to permit a further highly visible oil-spill in to the environment to protect against a possible hidden leakage in the future. BP, without such influence, would favor treating the capping as a stage reached, and from which attention can be focussed on the more permanent plans of sealing off the well completely.

Tuesday July 20th 2010

The broad story remains uncertainties over the capping procedure. http://www.bbc.co.uk/news/world-us-canada-10692360. Seepages on the sea floor have been detected near the leaking Gulf of Mexico oil. But Thad Allen, now named as the government’s incident commander suggests they may be unrelated to the oil-spill, or even to the entire drilling operation. The BBC report provides figures for the low pressure at the well-head. The pressure inside the cap is currently at nearly 7,000 pounds per square inch and rising at 1 psi per hour, while the expected reading was 8,000-9,000 psi.

Two side-issues

[1] Drilling of one of the two relief wells has been ‘temporarily suspended’, some 2000 feet above its target at the base of the original well.

[2] Estimates of another kind suggest that the big leakage will be into the bank accounts of the lawyers who will be gainfully employed for years

Saturday July 24st 2010 Weather conditions worsen. Ships withdraw from the area, and the entire operation may be left unmanned for up to 48 hours. ‘Hurricane Bonnie’ seems to be making a beeline for the area (do Hurricanes travel in beelines?). Little more news overnight [7am GMT]